Federal Reserve Chair Kevin Warsh faces a fresh inflation test Wednesday as the Consumer Price Index report lands, with economists debating what it would take for the Fed to consider raising interest rates rather than cutting them.
Economists Weigh Fed's Next Move Former Fed economist Claudia Sahm said in a post on X Tuesday, "CPI Eve," was a good time to revisit what it would take for the Fed to hike rates, while adding that inflation news since her last analysis had been favorable and questioning whether that trend would hold in Wednesday's report.
Her July post had drawn on two scenarios from the central bank's June meeting minutes, putting a 60% chance on the Fed holding rates and a 40% chance on a hike.
CPI Eve is a good time to revisit the question: what would it take for a hike?
My July post drew on the two scenarios in the June FOMC minutes—the closest we have to the Fed's reaction function.
